At last night's informal meeting, the Common Council took up the issue of the Good Cause Eviction Law. The law was enacted by the New York State Legislature in April. It automatically applies to New York City, but other municipalities in New York can opt in. So far, six have done so: Albany, Kingston, Poughkeepsie, Newburgh, Ithaca, and Beacon--all with populations significantly larger than Hudson's. Beacon, which is the smallest of the six, has a population of 15,259 as compared with Hudson's 5,749. There are two parts of the law that can be determined by each individual city: the definition of small landlord and the definition of luxury apartment. How Hudson would define each of these was not discussed at last night's meeting.
Before the discussion began, three councilmembers recused themselves and left the building: Vicky Daskaloudi (Fifth Ward) and Rich Volo (Fourth Ward), both of whom are landlords, and Dominic Merante (Fifth Ward), who is a tenant and said he did not want to be involved in making a decision that might benefit him financially. During the discussion, Jennifer Belton (Fourth Ward) revealed that she was a landlord, but she would be exempt from the law because she rents one apartment in the building where she herself lives.
Margaret Morris (First Ward) opened the discussion by saying that she was concerned the law would have negative impacts on tenants seeking apartments. She predicted that the law would be an incentive for landlords to set rents at the maximum amount to start with because rent increases are capped. She also predicted there would be no incentive for landlords to take a risk on a tenant because they would be entering into an agreement over which they had no control. For these reasons, she was not in favor of the law.
Morris also pointed out, "We do not know how many buildings [in Hudson] this [law] would apply to." Any building with income restrictions is exempt, as are buildings for which the certificate of occupancy was issued after January 1, 2009. It was suggested that a landlord could evade the law by taking a building off the market and rehabbing it to require a new certificate of occupancy. When asked about this possibility, Crystal Peck, counsel to the Council, said that litigation would define the specifics of this perceived loophole.
The Hudson critic who identifies himself as the Friendly Neighborhood Immigrant opined that "the law clearly is not designed for a city the size of Hudson." He said that Cambridge, Massachusetts, once had a similar law, but it destroyed the rental market, and the law was rescinded. He asked of the Council, "Why do you know better than Cambridge, Massachusetts?" He asserted, "In the long term, rent control harms those it is trying to help."
A representative of For the Many, the advocacy group that endorsed Claire Cousin in her unsuccessful run for State Assembly, maintained there was no evidence that the law would reduce the housing supply. He noted that it allows landlords to raise rents by 5 percent every year. He argued that the law gives tenants the right to ask for repairs and to make long-term plans without having to worry about where they will live. He also denied that the law would perpetually trap landlords in a lease.
Morris took issue with the statement that the law does not lock landlords into a lease in perpetuity and reiterated that it would make it very difficult for someone to get into an apartment. Lola Roberts (Third Ward) defended the law, saying that it protects people already in apartments, alleging that "landlords kick people out for no reason."
The Friendly Neighborhood Immigrant suggested the law might harm older people and disabled people. Morris elaborated, saying landlords could reclaim a unit for personal use or for a family member unless the tenant is elderly or disabled. This, she suggested, would make people unwilling to rent to the elderly or disabled.
Peck commented, "It's going to take time for issues not clarified in the law to be clarified in the court."
Supervisor Linda Mussmann (Fourth Ward), who owns rental properties in Hudson, commented, "We don't know how many small landlords there are in Hudson." She further opined that the law "would certainly discourage people from being a landlord."
The meeting was adjourned before there was any discussion of what might constitute a "small landlord" or what percentage of fair market rent would exempt an apartment as "luxury"--the two aspects of the law that can be determined by individual municipalities opting in to the law.
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Thank you Gossips, and here is more information on the Cambridge, MA "before and after" experiment with Rent Control:
ReplyDeleteIn November 1994, Massachusetts voters narrowly approved (51% to 49%) a statewide ballot initiative to end rent control.
This led to the abolition of rent control in Cambridge, MA (very progressive zipcode, more diverse than Hudson, NY) in 1995, with significant consequences:
- A 50% increase in new housing construction within four years
- A tripling of tax revenue from construction permits
- Annual investments in housing units more than doubled, as measured by building permit filings.
Of course lots of this was pent- up demand from the pre 1994 Rent Control period. But directionally, the evidence is crystal clear. In the medium to long-term Rent Control (and this well intentioned but unwise law) harms those it tries to help.
Relevant Podcast: https://freakonomics.com/podcast/why-rent-control-doesnt-work/
Relevant Cambridge, MA study:
https://www.nber.org/digest/oct12/end-rent-control-cambridge
Do you not understand the difference between rent control and good cause, or is grandstanding about a totally unrelated set of data and topics serving enough of an ideological purpose for you to hit Publish anyway?
DeleteGood morning sir!
DeleteI only saw your comment now. I'm not sure if you'll be notified about my response by the blog but let's see.
"Rent control" differs from a rental market with floating prices, where the cost of renting fluctuates dynamically based on supply and demand, rather than being set at a fixed rate. So, I do understand the difference. In fact, Cambridge, MA, pre-1995 functioned very similarly to how Hudson would function with this law where "local rent standards" prevail.
Now, let me steel man your argument ... The proposed law does try to be responsive (dynamic) and does not permanently fix a static price. Rather, landlords can attempt to exceed the mandated increase caps by justifying higher than mandated price increases in court by demonstrating that property taxes are higher, repairs are more extensive, etc.
Even then, one of the main arguments against the law is that it will clog up the legal system and lead to "search and matching frictions" in the market.
Just because a law is called one thing does not mean that is all it does. I am reminded of the well-intentioned USA PATRIOT Act—"Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act"—which included a lot of provisions and ultimately some questionable surveillance on American citizens and other privacy concerns.
Can you help me understand why a widely cited large-scale data set about a rental market that was not free-floating (increases were determined by local commissions in Boston) is being dismissed as "ideological" "grandstanding"?
Now, if your point is that you prefer the "good cause" part of the law, and you do not like that I emphasize the "price control" implications of the law, then we should have empathy for each other.
This whole national conversation on housing affordability is filled with Orwellian doublespeak.
In any event... I appreciate your challenge and wish you an excellent day.
Your early warnings regarding Galvan's PILOT's proved to be prophetic.
Only in Hudson: with no reason to do so, about half of the council recuses itself. If the council were considering a property tax reduction must the property owners recuse themselves? Of course not. If they did then city’s such as NY with income taxes would see their entire councils recuse in the event of a potential tax reduction. Where the benefit is societal, and not personal, where is the pressure to recuse when the statute doesn’t require it?
ReplyDeleteThe result in this case seems to be that those setting policy will only those wholly- disconnected from the externalities — positive and negative — of their choices. In other words, in Hudson at least, only property owners will be making the decisions about rental properties. Isn’t that what the Good Cause Eviction Law was supposed to prevent, at least in part? I think the city as a whole would be best served if the council members acknowledged that everyone is either a renter or a property owner, we all live here together, and get on with it. Personally, I think there are good and bad aspects of the state law but if enacted with a low minimum unit count for “Small Landlords” or what constitutes “Luxury” rent, we will soon have no private rental properties by “large” landlords except for luxury apartments. Welcome to Greenwich.
This situation is distinguishable from that which confronted the mayor a few weeks ago. In that case, one person would benefit and society would pay. Would a second person benefit? Impossible to know when the mayor won’t disclose his lease with the sole beneficiary of his vote. Sometimes, silence speaks volumes.